My accountant made a mistake on my tax return

Hiring an accountant to complete your tax return helps you focus attention on running your business rather than completing time-consuming financial administration. But what happens if your accountant makes a mistake, and what can you do about it?

When your accountant makes an error on your tax return

If you choose your accountant carefully, mistakes will be relatively rare, but from time to time errors are made and when it’s your tax return that’s submitted with the wrong information it can impact on your business in several ways.

HMRC operates a strict penalty regime for tax and National Insurance, and may impose a financial penalty on your business in some instances. How much you pay depends on a number of factors, including whether they think the mistake was careless or deliberate.

A professional agent of your business

As your tax return was completed and filed by your accountant, HMRC may be more lenient in concluding why the mistake was made, with certain caveats:

• You hired a suitably qualified accountant
• You provided all the information needed by your accountant
• You checked carefully through the tax return before it was submitted

The third point above can be an issue when dealing with mistakes on your tax return, as even if you did check the return carefully, there’s no certainty that you would spot an error if you have little or no financial or tax knowledge yourself.

Unfortunately, as a business owner you’re responsible for the accuracy of your tax return regardless of the fact that you’ve hired a qualified accountant. 

Ramifications of tax return mistakes

If HMRC do decide to impose a penalty it will be calculated as a percentage of the amount of tax owed, up to a maximum of 100%. This maximum amount is only applied when HMRC believe a deliberate underestimation of tax has been made in conjunction with an intentional attempt to hide it.  

An inaccurate tax return can cause serious problems for a business, and sometimes results in a significantly higher tax bill than was expected. Ultimately, this could trigger financial decline if the situation isn’t managed effectively, so it’s important to seek further professional help in this instance.

What can you do if your accountant has made a mistake on your tax return?

• Contact HMRC

It’s crucial to contact HMRC as soon as possible, and let them know the background to the error. If it involves a financial penalty from HMRC or a tax bill that’s larger than expected, they may be willing to offer a plan to help you repay what you owe over several months.

• Check your tax returns for previous years

It’s a good idea to have an independent accountant check your tax returns for the last few years to make sure there are no more errors. The mistake your accountant made will hopefully be a one-off, but it pays to be certain.

• Claim compensation from your accountant

You may decide to take legal action against your accountant, claiming through the courts for compensation. You’ll need to have paid any penalties applied by HMRC, however, prior to making a claim.

Handpicked Accountants can help you find the best accountant for your business. We’ll provide a shortlist of qualified, reliable accountants and accountancy practices in your area, keeping your business needs carefully in mind.

The referrals we make are all based on our extensive knowledge of the accountants’ working practices and levels of customer care, so you know they’re trustworthy and reliable. Please contact one of our experts to find out more.